Bain & Company discovered the luxury market took a 20% hit globally during the pandemic, shrinking to where it was in 2015 (circa €1trillion).
But with the market recovering, we look at how digital is driving growth for luxury brands and how marketers can make the most of the opportunity.
of luxury purchases happened online in 2019.
of luxury purchases happened online in 2020.
Where in 2019 online purchases had a 12% overall share, that accelerated to 23% in the following year. As consumers become more accustomed to purchasing luxury goods online, marketers have a great opportunity.
Shopping in the luxury market is often an emotive purchase based on aspirations. Brands in this space differentiate their brand identity by using a rich heritage or captivating stories. It’s no wonder that the limelight for marketing is on big brand campaigns featuring high-profile sponsorships, events, and celebrity endorsement.
But as purchases are increasingly taking place online, brands need to evolve their marketing to capture the ‘in the moment’ intent of today’s luxury consumer. Online was the fastest-growing channel, increasing by 50% and nearly doubling its share to reach 23% of luxury sales globally (up from 12% in 2019). Online sales made up €49 billion in 2020, up from €33 billion in 2019 (Bain & Company).
While we are a performance-focused agency, we understand the importance of the brand activity mentioned above, the harmony of brand and performance, the long and the short. But too often, the role of performance marketing is neglected in the luxury market.
We’ve outlined various questions broken down across awareness, engagement, and conversion, to help you understand whether you’re getting the most value from digital.
Is digital effectively showcasing your brand and helping you to reach more people?
Online audiences are more loyal to luxury brands. When analysing ten high-luxury websites across six industries, we found a high propensity of users only visit one brand’s website.
This was highlighted in hospitality. For high-luxury hotel websites, we saw that 74% of people only visited one website demonstrating loyalty to that brand. When we compared this against ten budget hotel groups, only 50% of people visited one website, with many comparing multiple websites before making a decision. With high brand loyalty, combined with effective loyalty reward schemes, marketers must work even harder to capture the attention of online audiences.
Use display and video ads across the breadth of your marketing activity, whether that’s showcasing your brand story, bringing attention to partnerships or sponsorships, or telling the world you’ve launched a new product or service.
If you’ve got a powerful campaign like the Mercedes-Benz one showcased above, think about how this translates across different digital channels and ad formats early on in the process. If your creative is designed for TV and you simply re-run it across YouTube, for example, success will be limited. An alternative is to cut that creative into a more concise key message, but the true value is realised when creative is specifically designed for the channel. Online ads give you the opportunity to engage with people over multiple interactions and repeating the same two minute video isn’t going to perform as well.
Use short-form teaser content to excite and intrigue, then showcase the more informative video with features and benefits, then re-engage with a conversion-focused one.
Tag Heuer embrace this approach and run a variety of video and display ads. They include creative showcasing its partnership with the Lawn Tennis Association, its smartwatch product line, and its Aquaracer watch model.
The intelligent use of digital ads can be a cost-effective way to enhance visibility over the competition. Many platforms allow tightly targeted geo campaigns. What key events do you partner with or aspire to align your brand with? As people consume content on their mobiles all of the time, even when they’re at Wimbledon, the Monaco Grand Prix, or Paris Fashion Week, think about owning the second screen opportunity through social, display and video ads.
Often, luxury brands will have direct display advertising partnerships with publishers, particularly when sponsoring activity across multiple channels. While it can help secure impressions on high-profile sites, look to extend your reach by running similar activity across other display channels. Ask your agency partner to provide viewability metrics and outline brand safety measures to make sure your ads are appearing in the best placements and can be seen.
Context will only become more important as privacy takes priority. Native advertising allows you to align your ads with super relevant content. Understanding what interests your audiences connect with and aligning your ads to them will build the basis for a relevant display prospecting campaign.
Digital channels help you test new messaging to different audiences in an efficient way. By analysing market trend data and your own on-site analytics, you can identify new audiences to target. For instance, in 2020 ultra-high net worth wealth grew fastest for those in the under 50 age bracket (source: Wealth-X World Ultra Wealth Report 2021).
If your marketing is traditionally targeted towards an older demographic, digital could help test this emerging one without alienating current audiences. To do this effectively, avoid assumed knowledge and understand how their passions and needs differ before planning your campaign creative.
Is your brand visible online in the right places? Are your profiles and locations consistent and up to date?
This is about helping consumers to learn more about your products and services, providing support and clear user journeys to take the next step before they’re ready to purchase.
In a privacy-first world, look at what information your customers are providing and use that to deliver valuable connections.
The answer box in Google SERPs helps you own the narrative around your brand and provide answers to the questions your customers are asking. Ensure your SEO strategy is supporting that brand story. Making your FAQs prominent and visible to users and search engines is often the simplest way to achieve visibility for those questions. If other publications or brands are being shown, this could indicate that your content is either not deemed relevant enough to the query, or perhaps hidden away. With dedicated pages to both responsible sourcing and responsible business, Chopard is effectively owning the search space for anyone looking for its sustainability credentials.
For brands with physical locations, claiming them on Google My Business will help to keep the information up to date.
It’s a quick way to help customers book appointments or speak with your team. Most importantly, accurate location listings can prevent a customer from turning up at a shop outside of opening hours or, worse still, one that doesn’t exist.
Well managed listings bring your locations to life. With imagery and 360 tours, you can showcase your flagship stores and give customers a reason to visit. Gucci’s Sloane Street store has an internal 360 tour, showcasing its displays and layout. Meanwhile its UK flagship store on Bond Street only has images and some unrelated video content that has been wrongly connected to the shop.
You can successfully reach high net worth individuals online. They have behaviour patterns, purchase products, and absorb content, which naturally provides an opportunity for marketers. Select the best placements, deliver carefully curated ad creative and performance marketing to help you to engage with new and relevant audiences.
With increasing privacy measures from Apples iOS 14 and Google restricting third party cookies, it is now more important than ever to use your first party data in ways which will aid your marketing efforts. This can be achieved by using your CRM data to segment audiences that can be used across different accounts for anything from targeting, up or cross-selling or even excluding purposes. Some examples of this could include:
Use customer segments to build similar audiences and apply these on an observation level to your existing ad groups while using smart bidding. This will give the system more data to better tailor bids during auction, so you can appear in front of audiences more likely to fit your target profile.
Traditionally, lookalike audiences would be used based on certain pixel-tracked events such as a purchase. However, since the rollout of iOS 14, this type of targeting method is not as powerful as it once was. To work around this, Facebook’s conversion API integration can help you connect with CRM data. This is an effective way to build lookalike audiences based on your best customers to find new prospects.
Personal data such as household income is a thing of the past. With less options available to target higher-income individuals, using CRM data is an accurate way to build audiences that are likely to purchase from your brand.
These are just two examples of many advantages that can be achieved when using your first party data effectively, but this data could be used for several options, including:
Remarketing is often only used to show visitors the products they recently looked at. Rather than using simple out-of-the-box remarketing, curate a story for your site visitors to stand out. If they’ve looked at products, can you show an ad that lets them discover the craftsmanship that went into it? Or if you know they’ve purchased, you could show an ad message related to the quality of aftercare or exclusive owners’ memberships?
The digital landscape will rapidly change in 2023, so the more you can do now to harness the power of your first party data, the easier the transition will be.
Is your path to purchase clear? Does your online customer journey drive better offline engagement?
If your offline experience is all about quality, your online one should be just as good. People expect fast websites that are easy to navigate without issue. In luxury, websites often have a heightened need to show what sets their products apart. Rolex uses media galleries to great effect, showing intricate watch details and precision engineering alongside user interaction to make the digital experience of viewing a watch as close as possible to being in a shop.
While rich media can help to sell a product or service, it can also do the opposite. If it leads to long website load times and poor user experience, it can frustrate your website visitors. Read our Need for Speed guide for more information and insight into testing and resolving potential issues.
Speed isn’t just about how quickly your website loads. Understanding the needs and motivations of people visiting your site can help to support user speed. This is how easy a visitor can find the information they’re looking for, such as navigating to certain product pages or learning about your service. Elements like effective site search, menu navigation or virtual assistants can help your users find the information they want efficiently.
By default, marketers often look at site content and user journeys on desktop, but for most industries, mobile traffic dominates. We analysed ten of the most visited luxury brands across six sectors to see how it varies.
Streamline your steps to conversion; the less work your customers must do, the more likely they will be to complete the enquiry, registration, or purchase.
Best practice conversion in luxury isn’t about big red sale banners or buy-now buttons, but clear user paths that make it easy for your customer to avoid online frustration. When designing the user journey for the Burgess website, we used best practice layout methods for yacht comparison pages, combined with clear filtering options. It becomes second nature for anyone to browse the yachts, while retaining the visual impact of the yachts themselves.
Digital is playing an ever more important role in luxury brand marketing. As online continues to drive more sales and bookings, there are several questions marketers should be checking to get ahead of the competition.
Top tip: Include the teams running your digital activity in the early stages of the brand campaign planning process and make sure to tailor creative for individual channels.
Top tip: Look to native advertising based on context rather than individual audience attributes, and your campaigns won’t be impacted by privacy changes.
Top tip: Use tools like alsoasked.com to see what people want to know about your brand and then look at whether you’re providing the answers to those queries.
Top tip: Claim your listings on Google, add brand-approved imagery, and look out for customers using it as a channel to ask questions.
Top tip: Regardless of whether your conversion goal is a phone call or an online product sale, a regular audit will help identify the barriers stopping your customers.
These broad questions are designed to kickstart thinking about your digital performance and only touch the surface. Delving deeper into these questions can shape your digital strategy.
To understand how you’re performing in your market and which competitors are making the most of the digital opportunity, get in touch.